Select Committee on European Scrutiny Fourteenth Report


DISUSED OFFSHORE OIL AND GAS INSTALLATIONS


(18897)

6346/98

COM(98) 49


Commission Communication on the removal and disposal of disused offshore oil and gas installations.

Legal base:
Department:Trade and Industry
Basis of consideration:Minister's letter of 8 January 2002
Previous Committee Report:HC 155-xxv (1997-98), paragraph 5 (22 April 1998)
To be discussed in Council:Not applicable
Committee's assessment:Politically important
Committee's decision:Cleared


Background

  6.1  In February1998, the Commission put forward this Communication on the disposal of disused offshore oil and gas installations, in which it assessed the various factors affecting the adoption of an international regime in this area and considered whether or not the Community should take direct action through the introduction of internal legislation. It did so against a background where the Oslo and Paris Commission (OSPAR)[26] had been reconsidering its policy in this area, following the decision by Shell not to proceed with the disposal of the redundant Brent Spar oil storage buoy at a deep-sea site, and the adoption in 1995, by a majority of Contracting Parties to the Oslo Convention, of a moratorium on disposal at sea of decommissioned offshore installations, pending the adoption of a new Decision on the matter under the OSPAR Convention. The Community was not at that time a Contracting Party to the Oslo Convention, but the Commission had declared its support for this decision, whereas the UK and Norway, the only contracting Parties who would have been affected, had opted out of the moratorium. The Oslo and Paris Commission had subsequently agreed unanimously that OSPAR should try to reach a decision which could command the support of all its Contracting Parties, and our predecessors were told that the intention was to agree such a decision at the first Ministerial meeting of the OSPAR Commission on 22-23 July 1998.

  6.2  The conclusion reached in the Communication was that the appropriate course would be for the Community to join in negotiating and implementing a policy on the disposal of offshore installations through existing multilateral agreements in international fora such as OSPAR. It went on to recommend that any action by the Community should aim to ensure that disused installations were treated in a manner consistent with that for other wastes under Community legislation and with Community environment and energy policy, as well as the needs of the Common Fisheries Policy. It also recommended that such action should take account of the technical review on the decommissioning of offshore installations carried out for the Commission by an independent consultant in 1996.

  6.3  The Communication therefore concluded that the OSPAR Decision must be based on the rule that complete removal and disposal on land is preferable, and that the scope for any exceptions to this, where total or partial removal and disposal at sea may be considered, should be limited to a few installations and clearly defined. Any such exceptions should be identified on the basis of individual evaluations, taking into account all relevant aspects including technical, environmental, safety and cost factors. However, the Communication recognised that large concrete installations should be exempted from this rule on the grounds that there were no proven technologies available for their removal to land.

  6.4  In an Explanatory Memorandum of 30 March 1998, the then Minister for Science, Energy and Industry at the Department of Trade and Industry (Mr John Battle) said that the Government was committed to establishing an international regulatory regime within the framework of OSPAR, and agreed with the Commission that this was preferable to Community legislation. It also welcomed the conclusion that existing large concrete installations should be exempted from the prohibition on sea disposal, and that other existing installations might also be treated as exceptions. He said that, as a consequence, the scope for debate was largely about how to determine what the other exceptions might be, and the consequent number of cases needing to be considered for sea disposal, including leaving in place.

  6.5  The Minister also dealt with the question of costs, where he said that an Assessment had not been produced as the Communication was not in itself a proposal for legislation. He added that the effects of any new rules established by OSPAR would depend on the extent to which these restricted sea disposal of installations where the UK would have been prepared to permit this, and that there were around 50 large steel installations in relatively deep water, which were likely to be at the centre of the discussion. In the extreme case, where it is assumed that new rules would prevent any sea disposal, the Government estimated that the extra cost for the industry would be of the order of £2,000 million over 25 years. In addition, there would be consequences for the Exchequer resulting from that proportion of decommissioning costs which the operating companies would be able to offset against the taxes and royalties, and, in the case outlined above, this could amount to about £1,000 million.

  6.6  Finally, the Commission had claimed in the Communication that the disposal of decommissioned installations was an issue for which the Community could exercise competence under Article 130r(1)[27] of the EC Treaty. In addition, it had suggested that by virtue of Article 130r(4)[28] it could exercise external competence for environmental questions. The Commission therefore argued that it would be appropriate for the Community to adopt a policy and to participate on behalf of the Member States in international negotiations. As a result, it proposed to submit to the Council a separate document requesting the Council to endorse specific negotiating directives for OSPAR. The Minister commented that the UK would not necessarily accept this view of competence, and would be seeking to ensure that both the Community, represented by the Commission, and Member States were able to participate in the OSPAR negotiations.

  6.7  In their report of 22 April 1998, our predecessors noted the estimated extra cost to industry (and the consequential tax relief), and asked whether the UK would wish to be a Contracting Party to such an agreement. They also asked why the Commission's estimate was rather lower, and, broadly, how the UK's figure was arrived at. They also asked for an assurance that, whatever decommissioning options were available to the Government under the OSPAR Decision, if the UK becomes a Contracting Party, an Environmental Impact Assessment will be made for each case, or generic option. Finally, they asked the Government to make available the text of the negotiating mandates in time for them to consider these before adoption by the Council.

Minister's letter of 8 January 2002

  6.8  In his letter of 8 January 2002, the Minister of State for Energy and Industry at the Department of Trade and Industry (Mr Brian Wilson) says that, in the event, the Commission left it too late to secure a negotiating mandate from the Council, and that both the Commission and individual Member States participated in the OSPAR meeting in July 1998, which established, with effect from 9 February 1999, a new regime for decommissioning offshore installations. He says that this prohibits the dumping or leaving wholly or partly in place of offshore installations, with a presumption in favour of re-use, recycling or final disposal on land, although it is recognised that there may be difficulty in removing the "footings" of large steel jackets weighing more than 10,000 tonnes and in removing concrete installations. As a result, there are derogations from the main rule for these categories of installation, which are considered individually.

  6.9  The Minister says that, prior to the OSPAR meeting, the Government had recognised that there was little to be gained in trying to preserve the options of toppling installations in situ or disposing of them at deep-water sites, since it was unlikely that companies would in practice be willing to exercise those options. In addition, a new perspective had emerged on the relative costs of the various options, the crucial factor in the equation being whether or not the bottom 15 to 30 metres of the installation jacket (which represents about one-third of the weight) is removed. As a result, he says that the OSPAR decision provided a saving of over £1 billion over the costs of complete removal.

  6.10  Finally, the Minister says that the OSPAR decision provides for regular review of the categories of installation for which it is possible to seek a derogation. The first of these will take place in 2003, and it has been agreed that the UK should take the lead in gathering relevant information, though the experience of decommissioning so far is limited.

Conclusion

  6.11  Though the action since our last Report on this subject appears to have been taken within the context of OSPAR rather than the Community, we are grateful to the Minister for this somewhat belated update. We have noted his comments, and, in the light of these, we are now able to clear this document.


26  OSPAR was set up by the 1992 Convention on the Protection of the Marine Environment of the North East Atlantic, and replaces and updates the 1972 Oslo Convention on the Protection of the Marine Environment by Dumping from Ships and Aircraft and the 1974 Paris Convention on the Prevention of Marine Pollution from Land-Based Sources. Back

27  Now Article 174(1). Back

28  Now Article 174(4). Back


 
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